Hedge
Funds: One of the Best Ways to Make Money and Reduce Risk
Author:
Ivon T. Hughes
"One
of the best ways to make money and reduce risk in today's choppy market is
through a classic hedge fund: one that bets on some stocks to go up and others
to go down." -- from the Jul. 01, 2002 issue of TIME magazine
Hedge
funds have been around for over 50 years but only recently have become an
investment choice requested by mainstream investors. Why? Because they generally
outperform all other asset classes during a market downturn. The better hedge
funds have even provided positive investment returns over the past three
years where most equity-based investments have seen significant losses.
A
hedge fund is a private investment partnership run by a money manager who
has his own money in the fund. The private aspect of the pooled fund gives
the manager more leeway in the securities and the strategies used compared
to traditional mutual or segregated fund managers.
Hedge
funds have performed better because they generally provide for greater diversification
and lower volatility over time. Traditional mutual fund managers are limited
to investing in long positions of the specific business sector identified
in the fund's mandate. If a sector gets hot, you can do well. But trends
change and specific mutual fund managers' investment strategies, which are
governed by their mandate, can not change. Hedge fund managers, on the other
hand, have much more flexibility and can react quickly to changing market
conditions.
Find
out about how incorporating these alternative investment strategies into
your investment plan can lower your investment's risk and potentially increase
your investment's returns.
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: [email protected]
Web: http://www.trustco.ca
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